Fasadgruppen Initiation of Coverage: Renovated investment case at an attractive price

We initiate coverage on Fasadgruppen with a Buy recommendation and a target price of SEK 26 per share. Fasadgruppen's value creation model is based on owning and developing businesses while consolidating the fragmented market for exterior property work. The company has created a strong market position with well-established local brands that generate good cash flow, which is crucial for Fasadgruppen to continue executing on its acquisition strategy. The valuation has declined to a very low level following a period of weak market conditions and moderate performance. While the environment remains challenging and near-term performance is likely to stay subdued, we expect the business to recover in the latter part of the year and view the risk/reward as attractive at current valuations.

Market leader with proven track record

Over roughly a decade, Fasadgruppen has become a market leader in the Nordics and expanded into the UK, providing services covering all aspects of exterior property work, including façades, windows, balconies, and roofs. Fasadgruppen's historically solid profitability, capital-light business model, and modest working capital requirements have enabled strong cash flow generation and accelerated geographic expansion through strategic M&A activity. Over the past five years, Fasadgruppen has delivered a 32% revenue CAGR and an average adj. EBITA margin of 8.7 %.

Turnaround in progress

Fasadgruppen's organic growth and profitability have been weak in recent years (2023-2025), reflecting macroeconomic headwinds, like rising interest rates, inflation, and a weak new construction market. In late 2024, Fasadgruppen acquired the high-margin company Clear Line, establishing a strategic entry into the UK market. However, the company has faced short-term challenges due to long approval processes for fire prevention measures in higher-risk buildings, which have temporarily delayed project starts. The significant acquisition, combined with weak profitability, resulted in high leverage and a rights issue in early 2026. Looking ahead, we expect Fasadgruppen's ability to improve the profitability of acquired businesses, coupled with a gradual market recovery, to drive margin expansion over time. We expect the improved visibility on delayed UK projects to support organic growth and profitability recovery in H2’26, given Clear Line's strong margins. Furthermore, we believe that with a strengthened balance sheet post-rights issue and improved cash flow, opportunities for continued M&A expansion will emerge. Reflecting on the Group's business model and strategic choices, we believe that the return on capital allocation achieved is the key driver of the stock's long-term return expectation.

We believe the risk/reward is attractive

According to our forecasts, the adjusted P/E ratios for 2026 and 2027 are approximately 7x and 6x, with corresponding adj. EV/EBITA multiples of around 6-5x. In relative terms, Fasadgruppen is valued significantly below its peers, despite historically delivering roughly similar return on capital levels. In absolute terms, the company trades below its 5-year median multiples, and our DCF value is well above the current share price. We believe the current low valuation reflects market skepticism about Fasadgruppen's turnaround and future capital allocation success. While requiring consecutive quarters of positive operational progress is reasonable given recent performance, we believe the market currently underestimates the probability of a successful turnaround. Given the current valuation, Fasadgruppen's historical capital allocation track record, and the reduced risk profile following the strengthened balance sheet, we believe the company’s interesting long-term investment story can be accessed with a good risk/return ratio at the current valuation.